Economy emerging as key election issue

updated 4:51 p.m. ET Dec. 12, 2007

WASHINGTON - Americans have turned markedly gloomier about the economy in recent months, a shift that is reshaping a presidential campaign long dominated by the war in Iraq and national security concerns.

Higher prices for gasoline and home heating oil, stock market volatility and rising mortgage foreclosures all account for some of the pessimism, in the view of political pollsters.

Significantly, they also cite the recent drop in real estate prices as a major worry for millions who have long viewed their homes as a source of retirement income.

“People feel less secure these days,” and their concerns turn to issues such as education, health care and retirement security as well as the economy, said Sara Taylor, a former White House political director not aligned with any of the Republican presidential hopefuls.

“What you’re going to do is see candidates focus more intensely on those issues because the voters are going to demand it,” she predicted. She acknowledged that voters tend to favor Democrats over Republicans in those areas.

The past several election campaigns have largely played out in reaction to the terror attacks of Sept. 11, 2001, and the war in Iraq. But now, said Democratic pollster Pete Brodnitz, “the war seems more stable, and in the meantime the economic situation seems less stable.”

He added that unlike the war, domestic issues are areas “where a candidate can really be responsible for concrete solutions.”

Recently, the wave of mortgage foreclosures has created a campaign issue where none had existed, particularly among Democrats who are critical of President Bush’s proposal for relief and are offering competing alternatives.

Prompted by turmoil in the credit markets, Bush announced an effort to help some homeowners facing possible foreclosures because they are not able to afford scheduled interest rate increases. The administration hopes to stabilize the housing market and help some homeowners by freezing their mortgage rates so they have time to refinance into more affordable fixed-rate loans.

He drew criticism from some Republicans who accused him of violating conservative principles by injecting the government into the marketplace.

At the same time, several Democratic presidential contenders accused him of a tepid response.

“For most Americans, a home is not just a place to live; it’s their most valuable possession — so preventing a larger crisis in the housing market means providing greater economic security for middle-class families,” Illinois Sen. Barack Obama wrote recently in a Wall Street Journal op-ed article.

Like Obama, Sen. Hillary Rodham Clinton and former Sen. John Edwards proposed more sweeping steps.

Clinton traveled to Wall Street to urge the securities industry and mortgage bankers to agree to a voluntary, 90-day moratorium on further loan foreclosures on owner-occupied homes and an interest-rate freeze of at least five years on subprime loans.

“If we cannot reach a voluntary agreement, I will consider legislation to address the problem,” added the New York Democrat.

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